Shein’s Profits Doubled to $2 Billion in 2023
Can anyone catch Shein?
The Chinese-founded e-tail leviathan more than doubled its profits to hit a record-breaking $2 billion in 2023, according to the Financial Times, which cited four people close to the company.
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In terms of gross merchandise value, the ultra-fast fashion purveyor racked up some $45 billion in goods sold through its website. That’s a lot of $6 bodysuits, $12 minidresses and $16 slingback pumps.
If the numbers hold up, Shein is now—arguably—the world’s second-largest fashion company by revenue, outpacing previous incumbent H&M Group, which rang in far more modest profits of 8.75 billion Swedish kronor, or roughly $815 million, during its last fiscal year. Zara owner Inditex remains at the No. 1 spot with an annual net profit of 5.4 billion euros, or $5.8 billion.
But while Shein has been quickly expanding its already formidable fashion empire, capturing a one-third stake in Forever 21 parent Sparc Group in August before annexing Missguided’s intellectual property from Frasers Group mere months later, its ambitions far exceed clothing. Besides opening its platform to global brands and third-party sellers, the juggernaut plans to offer its supply chain as a service to outside brands and designers, marking a shift in its business strategy that will swerve it further away from the oncoming headlights (not to mention lawsuits) of Temu, which supplanted Shein as the most downloaded shopping app in the United States in 2023 and has become its most bitter rival. China aside, TikTok’s buzziest brand has been making manufacturing inroads in Brazil and potentially Mexico.
Shein declined to comment.
More treacherous, however, has been the retail Goliath’s path to what pundits anticipate as the largest initial public offering in recent memory. Regulatory approval has to come down from Beijing—soon, people familiar with the matter told the Financial Times—as well as from Washington for a New York listing. It’s the latter piece that has proven tricky to obtain despite intensive lobbying to the tune of $2 million over nine months last year, according to public records.
Much like with TikTok, the company’s ties to China have come under congressional klieg lights. In February, Florida senator Marco Rubio sent a letter to U.S. Securities and Exchange Commission chief Gary Gensler urging him to require “extraordinary disclosures from Shein regarding its structure, interactions with the Chinese government and Chinese Communist Party and the risks of doing business in the PRC” or “protect U.S. investors by blocking the company’s IPO.”
Two dozen House of Representatives members, led by Virginia congresswoman Jennifer Wexton, have called for the same, as have the attorneys general from 15 states.
Plan B? A listing in London, though Shein must tackle a couple of outstanding questions first, among them the identity of its human owner. Xu Yangtian, the 40-year-old founder who also goes by Sky Xu, holds 37 percent of its stock, per lobbying disclosures. As of March, however, Roadget Business Pte. Ltd., a Singapore company, was listed in Companies House’s register of U.K. businesses, as Shein’s person with significant control, which is against the rules and could be deemed a criminal offense.
Future developments could similarly tarnish Shein’s shine. De minimis reform in the United States, for instance, could see the company ponying up for the import tariffs, duties and fees it’s been skirting on shipments that fall under the $800 threshold. It may also be subject to stricter enforcement under the Uyghur Forced Labor Prevention Act, which considers products made wholly or in part in China’s Xinjiang Uyghur Autonomous Region the product of modern slavery and therefore verboten in the United States.
Shein was also name-checked last month after France’s lower house of parliament unanimously greenlit a bill seeking to penalize ultra-fast fashion products up to 10 euros ($11) per individual item by 2030, as well as ban any related advertising.
“This evolution of the apparel sector towards ephemeral fashion, combining increased volumes and low prices, is influencing consumer buying habits by creating buying impulses and a constant need for renewal, which is not without environmental, social and economic consequences,” said the bill, which now heads to the Senate for approval before it can become law.
Temu, despite reports that it’s hemorrhaging cash in its pursuit of market share, isn’t doing too shabbily either. Its parent company, Chinese e-commerce group PDD recently touted revenues of 89 billion yuan ($12.3 billion) for the three months to December, a 123 percent boost from the same period in 2022. Temu could bring in as much as $16 billion in revenue this year, some analysts predict.
American lawmakers aren’t fans of Temu, either.
“Temu is one of many Chinese companies exploiting a loophole to avoid tariffs and flood cheap-made goods into the United States,” Rubio wrote on X in February. “We have to close this loophole.”
